The nevoid basal cell carcinoma syndrome (NBCCS) is an autosomal dominant disorder characterized by multiple basal cell carcinomas (BCCs), pits of the palms and soles, keratocysts of the jaw, and a variety of other tumors and developmental abnormalities. The NBCCS gene is located on chromosome 9q22.3; and both familial and sporadic BCCs display loss of heterozygosity for markers in this region. We have previously shown that the NBCCS gene is the human homolog of the Drosophila patched (PTC) gene. Patched is a segment polarity gene, essential for embryonic development. Single-stranded conformation polymorphism analysis and sequencing revealed mutations of PTC in patients with the syndrome and in familial and sporadic basal cell carcinoma (BCC) tumors. PATCHED is the receptor for the HEDGEHOG protein, a morphogen. HEDGEHOG binding releases PATCHED from repression of SMOOTHENED (SMO) a 7-transmembrane protein that initiates the signal. PATCHED is part of a complex feedback pathway in which <PTC mRNA is induced to produce excess free PATCHED and turn off the signalling pathway. In support of this we found that PTC message is overexpressed in many BCCs. Thus as in the Drosophila system, an absence of functional PTC leads to constituitive SMO signalling and elevated PTC mRNA. To further explore the role of this pathway in malignancy we have mapped the human SMO gene to chromosome 7q21. We have sequenced the 3' untranslated region of both the mouse and human genes and shown that there is extensive conservation. This suggests that there are conserved regulatory sequences in the gene. The finding that the pathways critical for the development of the embryo and adult tissues are also important to growth control, suggests that these two processes are interconnected and that other members of the HEDGEHOG and PATCHED signalling pathways may also be involved in neoplasia.